It Isn't a Fine Autumn Sky

Indian aviation is flying through heavy turbulence despite the government’s pro-industry directives. And the surge in Covid-19 cases across India is making matters worse.

- ANSHUL DHAMIJA

It’s been five months since domestic air travel has resumed, and yet, the aviation industry is still to fully emerge from the shadow of the pandemic. Only 50% of daily flights are operational, while daily passenger traffic hovers around 40% of what it used to be a year ago, according to various industry estimates. Also, for international air travel, the numbers are woefully low, which at present is regulated by repatriation flights and country-specific air routes. Clearly, Indian aviation continues to fly through heavy turbulence as the late surge in Covid-19 cases in the country comes as a strong headwind to the sector’s recovery.

Given the situation, airlines have axed jobs and furloughed employees, while some airline failures and consolidation aren’t being ruled out. This, even as the Indian government provides indirect help to the sector with so-called “protectionist” policies.

“In an industry where profitability is always a challenge—even in normal times unless both oil price and exchange rates are favourable—airlines are continuing to bleed,” says Sanjiv Kapoor, the former chief operations officer of SpiceJet, and former chief strategy and commercial officer at Vistara. “Any positive contribution from reduced operations is insufficient to cover the fixed costs.”

IndiGo—the biggest airline in the country—reported a staggering loss of ₹2,844.3 crore in the April to June period, while its nearest rival SpiceJet reported a loss of ₹593.4 crore in the same quarter. Both IndiGo and SpiceJet had reported profits of ₹1,203.1 crore and ₹261.7 crore, respectively, in the corresponding period last year.